Thursday, September 01, 2005

Happy Birthday

Alberta turns 100 today and things have never been brighter in Wild Rose Country. With a surplus of at least 3 billion this year and possible double that, the province is in a position to accomplish pretty much anything it wants. And, heck, the Flames nearly won a Cup last year and the Oilers landed Chris Pronger…times are good.

But you wouldn’t think things were this rosy if you listened to Albertans, from the politicians to the pundits. The latest complaint has been about the non-existant “NEP 2”. Even though there is no such program and no one in Ottawa has hinted that anything will be done to “rob” Alberta of its wealth, it provides a great straw man for people to take shots at.

This has predictably led to many bloggers posting their fond memories of the NEP. The Burkean Canuck gives a good analysis on the effects of the NEP here.

Here’s an excerpt from his post, written somewhat in response to my NEP post from early August.

The biggest lie of all is that central Canada helped Alberta during the dirty thirties. Ain't so. The Government of Alberta went hat in hand to central Canadian banks to restructure Alberta's debt, and they sought loan guarantees from the Government of Canada to take to the central Canadian banks. Both the central Canadian banks and the Canadian government turned Alberta down flat.

Things got so bad that by 1938, there was talk of merging Alberta, Saskatchewan, and Manitoba into one province, and the three Maritime provinces into another.

But the legend of central Canada's helping Alberta when the province was down and out is just that: a legend, a fiction that some occasionally find useful for their own purposes.

I don’t want to dwell on this too much, but I need to come back to it since one of the big defenses of the NEP (or equalization for that matter) is that Alberta had to pay a bit when times were good because the federal government was there, and will be there, for them when times are tough.

In the 30s, the Western Provinces had their loans guaranteed by the federal government to avoid bankruptcy. While digging for a reference to this in old University textbooks in my closet, I also came across this tid-bit in James Struthers' Canadian Unemployment Policy in the 1930s:

By 1937 Ottawa would be paying 85 percent of all relief costs in Saskatchewan; 71 percent in Alberta; 69 percent in British Columbia; and 68 percent in Manitoba; while still insisting that relief was a local responsibility. In Ontario and Quebec, in contrast, Ottawa paid only 29 percent and 32 percent, respectively, of relief costs.

There was also Diefenbaker’s National Oil Program that forced Ontario to buy Alberta oil, thereby helping the oilpatch grow, even if it meant higher prices for Canadian consumers. I also suspect a study on the amount of agricultural subsidies the federal government has dished out of the past century would find a staggering dollar total. And just recently, there was the billion dollar Mad Cow bailout.

Obviously Alberta puts a lot more into confederation than they get out, from a purely dollars and cents perspective. But this isn’t part of some grand conspiracy to rob Alberta of her wealth. This province hit the jackpot, not because Albertans work harder or because they elect Conservative governments, but because a lot of dinosaurs croaked here hundreds of millions of years ago. Like it or not, Canadians believe that the rich should help the poor, so that means Alberta is going to have to share some of the wealth.

I’m not advocating a new NEP, or an oil tax, or a change to the equalization formula – I’d just like to see an end to the over the tops screams that Ottawa is out to “rob” Alberta, when this is simply the nature of Confederation. Albertans should be grateful for the riches we’ve been blessed with and focus on using them to make this province even better.

21 Comments:

I'd like to see Alberta share some, even just a small percentage, of its wealth with its poor cousins: Saskatchewan and Manitoba. After all, Albertans are quick to include them whenever they talk about the west's grievances so why shouldn't they also include them in the windfall.

"I’d just like to see an end to the over the tops screams that Ottawa is out to "rob" Alberta, when this is simply the nature of Confederation."

Hmmm... how about Charest, Landry, Duceppe putting a sock in it about "the night of the long knives" or "je me souviens?" They could shut their pie hole about whatever latest outrage offends "the nation of Quebec" too. As the only region to have their federal governemnt declare economic war on them, I think the screams from Alberta are understandable, even if a bit shrill. Seeing Marc Lalonde with a stake through his heart, rather than confabbing with another Quebec-based PM (even one who vowed to cure western alienation) might tone down the screaming, too.

Does the equalization system suck? Sure. Is the problem only on the revenue-collection side? No way. Will tinkering with the way funds are taken from Ontario, Alberta, and BC (by the time this gets sorted out) give us a working system - no? That won't fix the problem because the rot goes deeper than just 'who contributes, and how much.' If Mr McGuinty et al wanted to talk about the purposes of equalization, what we hoped to achieve with it, how we would measure that achievement, what we would not try to do with it - well then I would expect Albertans (or Albertan politicians, at least) to listen to him and contribute to a dialogue instead of screaming, and I would expect the same of other provincial politicians as well.

But he and his cohorts won't do that, because it is the broken part of equalization, the part that keeps doling out cash to Quebec and the Atlantic provinces (and thereby keeps them poor and dependent), that keeps Liberals in power and preserves Ontario's influence in Ottawa. He doesn't want to see that part of the program fixed, so instead he muses that the revenue side needs to be looked at, and that Ontario should pay less; if you don't fix the spending side, that means someone is going to pay more - I wonder who he has in mind?

There needs to be an incentive for not spending into debt, currently it's prosperity. Take that away and we might as well spend more then our income. We should be allowed to keep at least a part of our wealth, for leaner times that are bound to opccur at some point.

But we should help our neighbours too. The more provinces that we can get out of debt, the more that can stay out of debt, thereby contributing to the prosperity of the whole.

Oh, and theory is theory until proven. Oil is thought to be organtic in origin by most but it's still a theory. No fossils have ever been found in coalbeds or oilpatches. The absense suggests that the theory is wrong. Abiotic oil theory makes a heck of a lot more sense, seeing that oil is lighter then rock or water yet lies beneath where no organtic life has ever existed.

No NEP 2 coming? You may be right. In that case, you'd better tell Jean Lapierre. From Aug. 25's La Presse:

In an August 25 interview in La Presse, a French-language Montreal daily, Paul Martin's right-hand man in Quebec, Transportation Minister Jean Lapierre, said: "I don't think anyone can transform Quebec's economy without government help ... The federal government has the duty to be a real partner, especially since as a government we benefit from the West's wealth. So we have to redistribute the wealth. After all, the good fortune of the West could become a disaster for the East. That is why we need a pact that will allow us to even things out."

Complex carbohydrates are always organic, they don't exist in nature except in living things... And as for being buried in rock... well we'll look at your gravesite in a few million years and see where it's at.

Ralph Klein wrote a pretty convincing editorial for the National Post the other day. His points were basically that Alberta already contributes more per capita than Ontario to equalization, and that while it's happy to do so, any more would be excessive. While I'm not so sure about the "happy to do so" part (most Albertans I've encountered seem to hate the equalization system) he does perhaps have a point about the other thing.

The province of Alberta makes 8.4 billion dollars from oil royalties. It contributes a net of 9.3 billion dollars to equalization. So, the federal government already takes all of Alberta's oil money plus another 900 million dollars every year. And yet, we get people like Lapierre demanding more more MORE MORE MORE.

So let's just stop the BS about Alberta oil revenues contributing to Alberta's financial success. There is another reason why Alberta is in the black: we spend less than we take in. Or does nobody remember the Calgary general hospital being blown up? ...and all the other belt-tightening measures we went through in the 90s.

A few comments by a few people, Quebec lieutenants or otherwise, do not policy make.

Things are different than they were in the 70s and early 80s. Back then the NDP used to routinely talk about nationalising things and government intervention was seen as an option. I think those days are over for the forseeable future.

Unfortunately, there are too many people who have a stake in an increase in western alientation and separatism (Ezra Levant, come on down!), so we'll be hearing about supposed conspiracies for a long time.

For the record, this Ontario Liberal voter believes that A) the NEP was a bad idea. I'm sorry; B) that while it sucks to pay so much for gas, at least it's staying in the country; C) that Alberta is contributing a great deal to the rest of the country through the Federal taxes paid by Albertans; D) Dalton McGuinty wasn't casting covetous eyes on Alberta's revenues - he was whining to the Feds looking for more $$$ for whatever; and E) that there is no Ontario groundswell of support for some sort of NEP2. I don't think most of the people recently polled by Leger even know what nationalisation means.

So, I know Albertans don't trust us Eastern bastards, but all I can say is your money is yours and we're not trying to take it away from you. Ontario created it's own problems and will have to deal with them (fed help notwithstanding)....

Klein and McGuinty had a great "he said she said" column split in the post over the weekend. Klein made a great defense of equalization, and showed precisely how Alberta's wealth finds its way elsewhere.

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I'd like to see a Canada that can follow in Alberta's footsteps and turn around a failing economy through a little tough love. Suck it up for a couple months, get a little stingy and restructure - then, use your fiscally sound budgeting to improve to the point you no longer rely on just resources.